White Paper: Scaling up institutional investment for place-based impact

Published on
26th May 2021

Our joint white paper “Scaling up institutional investment for place-based impact,” based on the collaborative “Place-Based Impact Investing Project (PBII)” by the Impact Investing Institute, The Good Economy and Pensions for Purpose, sets out the case for institutional investors to adopt a “place-based lens.”

The report shows that there are real opportunities for investors to secure financial returns while addressing place-based inequalities and support more inclusive and sustainable development across the UK.

The report’s main findings

  • Assets identified as place-based investments already exist in portfolios of local government pension schemes and can provide stable, risk-adjusted returns and low volatility.
  • Currently, place-based impact investment is limited, with local government pensions schemes investing around 1% of their portfolio in ways that could directly support local and regional economic development and positive place-based impact creation.
  • However, there is a legacy of local investing by local government pension funds. If 5% of their funds were allocated to local investment this would unlock £16 billion focused on delivering both financial returns and responding to the needs and opportunities of specific places.

Focus on local government pension schemes and beyond

While the initial phase of the project was focused on the role of the £326 billion Local Government Pension Scheme, we believe that place-based impact investing has the potential to become a new paradigm or lens for all kinds of investors.

The report explores how to scale-up institutional capital into local and regional opportunities in key sectors including affordable housing, clean energy, infrastructure, small and medium-sized enterprises finance and regeneration.

Supporting the “Levelling Up” agenda

Place-based inequalities, the report also points out, are more extreme in the UK than in most comparable economies and have existed for generations. Meanwhile, the coronavirus pandemic, coupled with Brexit, have moved this seemingly intractable reality to the centre stage of the public debate.

With the UK government’s “Levelling Up” agenda expected to require £1 trillion of spending over the next 10 years, the report sets out a clear rationale and path for how private capital could be mobilised alongside public investment.

What is next?

The project is now looking to harness the interest generated amongst local government pension schemes, local authorities, fund managers, asset owners, consultants and other place-based stakeholders by inviting them to participate in a second phase. Organisations interested in the project can sign up for regular updates here.

The PBII Project is funded by the Department for Digital, Culture, Media and Sport, the City of London Corporation and Big Society Capital.

Related files

White Paper: Scaling up institutional investment for place-based impact

File published on 26th May 2021